What Does Economic Growth Demand?

Josh and Agnes would both like Tyler to be more concrete: what does an ethics of economic growth maximization demand of us?

I suspect Tyler has reasons for preferring to keep Stubborn Attachments in the realm of the abstract. Nevertheless, I am happy to give my own views as to what growth maximization actually looks like. But first I want to push back a little on especially Josh’s query, with apologies if I have misunderstood him.

As I understand it, Josh is coming to this discussion with certain ideological priors. He sees in the abstract that Tyler has a compelling argument, but he wishes to understand how—concretely—an ethics of growth maximization interacts with his prior ideological commitments. This is a backwards way of doing ethics. If one accepts Tyler’s premises and his reasoning, one ought to accept his conclusions, even if they sit uncomfortably with one’s prior ideological preferences.

In this sense, at least, Tyler is as radical as Peter Singer, who also argues for conclusions which are uncomfortable to many. If Singer’s conclusions are wrong, one ought to find fault with the argument (which is what Tyler has done). Insofar as we are doing ethics and not aesthetics, one ought not to reject Singer’s conclusions simply because they don’t comport with prior views. That’s also not how we should approach Tyler’s argument.

With that minor objection aside, how could we increase economic growth sustainably without violating human rights? I can think of several ways:

  1. Improve individuals’ access to productive efficiencies that arise from urban life. We cannot execute the NIMBYs without rights violations, but we should overrule them politically. We should upzone, remove parking minimums and subsidized parking, allow denser and taller development, institute land value taxes, allow mixed use, and simplify construction permitting. Our economy would grow much more quickly if more people were able to live in our most productive cities, like San Francisco, that are capacity-constrained.

  2. Accept lower levels of safety. When building new infrastructure, we often spend years doing environmental impact assessments which cause delays and high costs without actually providing much in the way of environmental protection (they do allow environmental advocates to temporarily hold projects up in court but that is about it). Drug development costs are raised by a years-long approvals process that perhaps results in safer drugs on average but reduces the total number of drugs brought to market, and many safe ones are excluded. We probably would not have planes, trains, or automobiles if we had insisted on today’s safety levels during the early days of those technologies’ development—likewise, we should have laxer safety standards for new emerging technologies.

  3. Allow many more immigrants to work in wealthy countries. Taking a talented worker from the Central African Republic, where she will not be very productive, and moving her to the United States, where she will, obviously will increase global productivity. We should do much more of this, as we are nowhere near margins where the total quantity of immigration could be destabilizing.

  4. Spend fewer resources “showing that we care.” The RAND health insurance experiment famously showed that health insurance leads to more health care consumption but not necessarily to better health outcomes. The Oregon Medicaid health experiment yielded similar results. We also spend a large fraction of all health expenditures in the last year of life. It’s hard to avoid the conclusion that much health spending, both public and private, is wasted. Similarly, we spend a lot of money attempting to educate people at all levels who don’t really want to learn, and we subsidize higher education without regard to the productivity of the selected major. We could be more “heartless” here without harming economic outcomes very much.

  5. Conduct much more basic research. Some of the resources we currently spend keeping the elderly alive could be used to do research on how to delay or reverse aging, providing enormous benefits to future people as well as to the economy as people with longer healthspans could have a longer productive life with a given amount of training. Nuclear fusion research also strikes me as particularly worthy, but my central planning instincts aside, we should do more research across the board. Insofar as our current methods of funding basic research are not getting the best results possible, we should explore alternatives, which might involve slaughtering some sacred cows.

  6. Do less social engineering. The United States in particular does an incredible amount of social engineering through its tax code (e.g., the home mortgage interest deduction). There is no growth justification for this, yet it harms growth by necessitating higher marginal rates to pay for the deductions and credits. The tax code could instead tax negative externalities like carbon dioxide emissions first, then do loophole-free Ramsey taxation on the rest of the economy. This would reduce the amount of resources destroyed through taxation.

  7. Get rid of inefficient giveaways to particular industries. Scrap steel tariffs. Eliminate the farm bill. Repeal the Jones Act. Allow new hospitals to be built. Let nurse practitioners have a larger scope of practice. Let unbarred entrepreneurs compete with lawyers. Stop regulating cosmeticians and florists altogether. All of these protectionist restrictions provide higher social costs than benefits.

I could go on. Although it may be possible to quibble with any of the items on my list, at least to my mind it seems that we are very far away from growth maximization. I wonder if Josh and Agnes accept this conclusion.

In addition, this partial list shows that although Tyler’s framework imposes some ethical demands on individuals (don’t be a NIMBY), to a considerable extent, the ways to improve growth involve some level of collective action. It is our collective institutions that are failing us. On an individual level, Tyler’s framework may not be as ethically demanding as Peter Singer’s, but it is quite radical and foreign to western societies on a collective level.

Also from this issue

Lead Essay

  • Tyler Cowen looks at the place of economic growth in philosophy and public policy. He finds it’s an underexamined subject. But if we really can make small, sustainable improvements to long-term economic growth, these seemingly trivial changes will prove in the long term to be among the most important choices we make today. Cowen therefore argues for giving greater weight to the longer term.

Response Essays

  • Joshua M. Kim argues for public education and a higher minimum wage, challenging the advocates of economic growth to make the case against them. Although Kim agrees that economic growth matters, he is skeptical that providing social welfare today is liable to slow economic growth, and he calls on Cowen and others to justify this part of their argument.

  • Agnes Callard sees Tyler Cowen as engaged with the classic utilitarian argument for radical wealth redistribution: since spatial differences don’t have moral significance, and the marginal value of our wealth is much higher in the hands of someone crushed by poverty, we should relinquish what we have until that marginal difference disappears. She frames Cowen’s response to this argument in terms of two claims: the similarly arbitrary character of temporal differences, and the utilitarian value of economic growth. When we consider the welfare of future human beings, together with the power of economic growth to raise all boats, then this utilitarian argument becomes an argument for the status quo.

  • Economic growth is fundamental to human well-being, says Eli Dourado; why have ethicists neglected it? He answers that much philosophy was produced when economic growth was either nonexistent or difficult to notice. Even modern ethicists may need to take stock of the world around him, he suggests, and he closes by praising the beauty of economic growth.